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3 pts

Opinion on  Reynolds American Inc. (RAI)     Sector: Consumer/Non-Cyclical  >  Industry: Tobacco
Tobacco Stocks Smoking the Overall Market

Sep 14, 2008 05:33 PM UTC
Rxpic
Return Risk
-1.27% MID
Principal

Tobacco Stocks Smoking the Overall Market

Global Tobacco Index Stats
Top 5 Companies by 1-Year Stock Gain
Top 5 Companies by Market Cap

The tobacco industry is smokin' the overall market and benchmark funds over the past year, thanks to news today that Altria ( MO ) is looking to buy smokeless tobacco company UST, Inc. ( UST ) for about $10 billion, and defensive buying by investors as economic uncertainties have dragged down the overall market the past few days. Another notable mover is Star Scientific ( STSI ), which has vaulted to gains of over 260% during the last year on a successful appeal for a patent infringement lawsuit against Reynolds American ( RAI ). The ruling opens the door for a possible legal settlement or the case will proceed to a trial.

A total of 25 companies are included in the Global Tobacco Index profiled in the accompanying tables with companies valued at over $200 million US Dollars. The Top 20 active companies are chosen by a rating system as equally-weighted components in the index. The Global Tobacco Index outpaced the S&P 500 ETF ( SPY ), along with the following benchmark funds: iShares Global Consumer Staples ( KXI ), Vanguard Consumer Staples ( VDC ), Consumer Staples Sector SPDR ( XLP ), and iShares Dow Jones Select Dividend ( DVY ). Only the Select Dividend ETF has a higher yield than the 4.1% average for the Global Tobacco Index, but DVY is down 23.9% over the past year which more than offsets its high 4.9% yield.


RAI:  This call was made on 09/14/08 @ $49.0
Rating:   Positive   $49.0 (09/14/08)
Closed:   10/16/2008 @ $42.82 (-12.61% in 32 days)


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Locationh   64%     1 point   commented 116 days ago reply

Great call


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